EUR/USD Reaches Yearly Highs Amid Dovish Fed Expectations
The EUR/USD pair has seen a resurgence in buying momentum, approaching a 13-month high around the 1.1200 mark. This uptrend can be attributed to various factors influencing the forex market, particularly the weakening US Dollar and positive risk sentiment among investors.
Factors Driving the EUR/USD Pair Higher
- The US Dollar is under pressure due to expectations of a dovish stance by the Federal Reserve, with over a 75% chance of a 50 basis points rate cut in November.
- Weakening US economic data, such as the sharp decline in the Consumer Confidence Index and sluggish manufacturing activity, have contributed to the Dollar’s decline.
- Stimulus measures from China have boosted investor confidence and appetite for riskier assets, shifting flows away from the safe-haven USD.
Market Focus and Expectations
Traders are closely monitoring upcoming speeches by Fed officials, including Fed Chair Jerome Powell, for further insights into the central bank’s monetary policy. Additionally, the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday will play a crucial role in shaping market expectations regarding future rate cuts and currency movements.
Technical Analysis and Outlook
From a technical standpoint, a sustained break above the 1.1200 level could trigger further bullish momentum in the EUR/USD pair. Oscillators on the daily chart suggest room for additional upside, potentially targeting the 1.1275 and 1.1300 levels as key resistance zones. On the downside, immediate support is seen near 1.1160, followed by 1.1135 and 1.1100 levels, with further downside potential towards the 1.1085-1.1080 zone.
Conclusion
The EUR/USD pair’s recent uptrend is driven by a combination of factors, including dovish Fed expectations, weak US economic data, and positive market sentiment. Traders are awaiting key events such as Fed speeches and the US PCE Price Index release to gauge future market movements. From a technical perspective, the pair remains bullish with potential resistance levels at 1.1275 and 1.1300, while support levels lie at 1.1160 and 1.1135.